Khan is by far the best-known antagonist in Star Trek to the general audience. That is reason enough to use him.

Actually, I would wager the best-known antagonists to the general audience are the Klingons, followed closely by maybe the Borg. TWOK was 31 years ago -- its lasting impact on casual Trek fans, and even the general audience at the time, has long since waned. Of course, one could also argue that makes it ripe for a reboot.

To be fair, Family Guy continually makes TWOK themed jokes in their episodes, rannging from scene reenactments, clips of footage from the movie, and at one point they even had Ricardo Montalban voice a character in an episode, with a very subtle TWOK reference. So TWOK is still well-known to the general public, even if it's that thing Family Guy is always doing jokes about.

That said, I agree I don't get why eevryone is clamouring to get Khan into an Abrams movie. Hell, there have been discussions about it going back to before XI was released, and according to Bad Robot, an end scene featuring the Botany Bay was proposed for XI.

Khan is from one episode and one movie. The most popular movie, yes, but still just one. The rest of the TOS movies don't even bother to mention him by name, and since TWOK Khan has only been mentioned a handful of times in the shows. His story is told, the only ground left to cover was his life in the 20th century and his time on Ceti Alpha V, both of which have been covered in the novels. And in the case of Ceti Alpha V, a comic series also covers that.

He is by no means Star Trek's primary villain. Ask any random dude on the street "who are the bad guys in Star Trek?" their answers are going to be Klingons, Romulans, or Borg.